Thursday, October 13, 2011

Indian government to enable public sector enterprises to acquire raw material assets abroad

The Union cabinet has on October 13 decided to set up a committee of empowered group of secretaries to consider central public sector enterprises to acquire raw assets abroad. The Government's view is that Indian companies have not been nimble on this front that there is a need for a governmental framework to facilitate public sector companies to go out and buy mines, oil wells to boost economic growth. Information and Broadcasting Minister Abika Soni briefing the media said that this was felt to be necessary to meet the challenges of India's expanding economy.

The blue-chip public central sector enterprises known as "navaratnas"and "mahanavaratnas"which have shown profits in the preceding three years will be allowed to acuire raw material sources. It was explained that it was felt there was a need for coordinated view to make better buys. For example, if one of the public sector units was looking to buy a coal mine, there would also be a consideration to look for iron mines as well.

Asked if the government was considering setting up a sovereign wealth fund to facilitate the acquisition of these raw assets, the official said there was as yet no plan to do so. The idea of a sovereign wealth fund has been in the air for more than a year now, but the government seems not to have made its mind up in the matter.

The fact that the Manmohan Singh government has decided to allow the central public sector enterprises to acquire raw assets goes to show that whatever be the rhetoric of economic librealisation, which has been taken to mean by free market zealots including former disinvestment minister Arun Shourie the dismantling of public sector lock, stock and barrel, there is the growing realisation that in India the public sector remains a key player for the economic growth of the country and to strengthen the national economic interests.